Coca-Cola sees success with small pack sizes, celebrating ‘a tremendous amount of positive growth’
Small sizes have been springing onto shelves, particularly from soda manufacturers, as a way to control portion sizes and reduce calories per serve. For Coca-Cola, the strategy seems to be paying off.
In the first five months of 2015, sales of Coca-Cola smaller pack sizes were up 17% in North America (such sizes include 7.5 oz mini cans, 8 oz glass bottles and 8.5 oz aluminum bottles). It follows similar growth in 2013 and 2014.
Critics argue that smaller pack sizes allow companies to charge more for less. But chairman and CEO Muhtar Kent says small packs are what the consumer wants.
“The consumer is very much approving the smaller packages,” he said in yesterday’s Q2 earnings call. “Smaller packages are growing much faster than larger packages.”
Advocates of smaller sizes include mothers, who use the format as a way of giving out suitably sized treats, added Sandy Douglas, executive vice president and president, North America.
“We have data in some of our retail partnerships that shows that moms, in particular, like small packs and are returning to the category to use small packs as a way of giving treats to teenagers and others in the household.
“And it's a particularly positive thing, because moms can do that with a pack that isn't too big. Whereas, for many years in the category, we marketed packages that were too big, that were either wasted or over-consumed.
“Our package mix no longer does that, and it's one of the reasons why our growth is accelerating.”
What about big bottles?
But is the growth of small packages at the expense of traditional, larger sized products?
“Small packages clearly are driving a tremendous amount of positive growth,” said Douglas. “Some of it is cannibalistic, but the cannibalistic nature of it accrues to higher margins. So the mix shift is positive, and then you have the incremental transaction growth that's being driven there.
“And the primary reason is that the consumers want smaller packages. That's why they're buying more Cokes.
“Our marketing model is about more people enjoying more Cokes more often for a little bit more money. And that's what we seek to accomplish in the marketing and execution of our brands.”
The company released its Q2 results yesterday, which saw reported net revenue decline 3% and organic revenue grow 4%.
Global sparkling beverage volumes in the quarter saw brand Coca-Cola up 1%, up 6% for Coca-Cola Zero, 3% growth for Sprite and 2% in Fanta. Diet Coke, however, declined 7%.